June 7 (Bloomberg) -- Liu Li-Gang, head of Greater China economics at Australia & New Zealand Banking Group Ltd. in Hong Kong, comments on China’s decision to cut interest rates for the first time since 2008.
“Symbolically this is very important as this indicates that monetary policy is no longer in a state of fine-tuning, and is now in a stage of becoming more accommodating. Inflationary pressure is falling and this sets the stage for the PBOC to lower interest rates.”
“This was also to try and alleviate the borrowing costs for Chinese firms. We think interest rate cuts will still be measured going forward. More importantly the PBOC will continue to lower reserve requirement ratios by injecting more liquidity into the banking system. More cuts to interest rates will be dependent on the outlook in inflation.”
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